Question 1

If the government reduced marginal tax rates on Social Security receipts to zero,

Accepted Answer

A) All retirees would receive full benefits. 
B) Output from older workers would decrease. 
C) The financial cost of the program would decrease. 
D) Payroll taxes for the program would decrease. 
A) All retirees would receive full benefits. 
B) Output from older workers would decrease. 
C) The financial cost of the program would decrease. 
D) Payroll taxes for the program would decrease.

Question 2

Means-tested income transfer programs are referred to as

Accepted Answer

A) In-kind transfer programs. 
B) Welfare programs. 
C) Cash transfer programs. 
D) Social insurance programs. 
A) In-kind transfer programs. 
B) Welfare programs. 
C) Cash transfer programs. 
D) Social insurance programs.

Question 3

Lower marginal tax rates for welfare programs will

Accepted Answer

A) Decrease the incentive to work. 
B) Decrease total welfare costs. 
C) Make more people eligible for welfare. 
D) Increase the moral hazard associated with welfare. 
A) Decrease the incentive to work. 
B) Decrease total welfare costs. 
C) Make more people eligible for welfare. 
D) Increase the moral hazard associated with welfare.

Question 4

When a program is means-tested,it means that

Accepted Answer

A) To be eligible,the recipient must have little income. 
B) It is a social insurance program. 
C) It is an in-kind program. 
D) The target efficiency is high. 
A) To be eligible,the recipient must have little income. 
B) It is a social insurance program. 
C) It is an in-kind program. 
D) The target efficiency is high.

Question 5

If welfare benefits equal the poverty gap for each household in poverty,then

Accepted Answer

A) The effective marginal tax rate for welfare recipients is 50 percent. 
B) Every dollar of wages results in a lost dollar of welfare benefits. 
C) Total output for the economy will increase. 
D) People who are classified as poor will have a strong incentive to work. 
A) The effective marginal tax rate for welfare recipients is 50 percent. 
B) Every dollar of wages results in a lost dollar of welfare benefits. 
C) Total output for the economy will increase. 
D) People who are classified as poor will have a strong incentive to work.

Question 6

The largest portion of Social Security expenditures is for

Accepted Answer

A) Retirement benefits. 
B) Disability benefits. 
C) Survivor benefits. 
D) Medical benefits. 
A) Retirement benefits. 
B) Disability benefits. 
C) Survivor benefits. 
D) Medical benefits.

Question 7

Thirty years ago in the United States,there were about ________ workers for every retired person.

Accepted Answer

A) 4 
B) 2 
C) 1 
D) 8 
A) 4 
B) 2 
C) 1 
D) 8

Question 8

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - Wages A welfare system based on the welfare formula given

Accepted Answer

A) Will increase the risk of moral hazard. 
B) Will increase work incentives. 
C) Will increase the number of people eligible for welfare. 
D) Has an effective marginal tax rate of 50 percent for welfare recipients. 
A) Will increase the risk of moral hazard. 
B) Will increase work incentives. 
C) Will increase the number of people eligible for welfare. 
D) Has an effective marginal tax rate of 50 percent for welfare recipients.

Question 9

Social Security

Accepted Answer

A) Is an intergenerational redistribution of income. 
B) Is financed like private pension plans. 
C) Results in regressive wage replacement rates. 
D) Allows the market to determine FOR WHOM goods are produced. 
A) Is an intergenerational redistribution of income. 
B) Is financed like private pension plans. 
C) Results in regressive wage replacement rates. 
D) Allows the market to determine FOR WHOM goods are produced.

Question 10

If welfare benefits equaled the poverty gap for each household in poverty,then

Accepted Answer

A) Work effort would increase. 
B) Production possibilities would expand. 
C) Poverty would be eliminated. 
D) The mix of output would not change. 
A) Work effort would increase. 
B) Production possibilities would expand. 
C) Poverty would be eliminated. 
D) The mix of output would not change.

Question 11

Which of the following is used to determine if a family is in poverty?

Accepted Answer

A) The level of education attained. 
B) The level of current income. 
C) The medical needs of the family. 
D) The work ethic of the family. 
A) The level of education attained. 
B) The level of current income. 
C) The medical needs of the family. 
D) The work ethic of the family.

Question 12

Social Security payments depend on an individual's wages,but the benefits formula is progressive.

Accepted Answer

A) True 
 B)False

Question 13

Social Security is an example of

Accepted Answer

A) An in-kind transfer program. 
B) A cash transfer program. 
C) A welfare program. 
D) Neither a transfer nor welfare program since individuals must contribute to the fund. 
A) An in-kind transfer program. 
B) A cash transfer program. 
C) A welfare program. 
D) Neither a transfer nor welfare program since individuals must contribute to the fund.

Question 14

Refer to Figure 34.4.The implied marginal tax rate in this example is

Accepted Answer

A) 0 percent. 
B) Between 0 and 100 percent. 
C) 100 percent. 
D) Greater than 100 percent. 
A) 0 percent. 
B) Between 0 and 100 percent. 
C) 100 percent. 
D) Greater than 100 percent.

Question 15

Which of the following is an example of an in-kind transfer?

Accepted Answer

A) Income transfers. 
B) TANF. 
C) Medicaid. 
D) Social Security. 
A) Income transfers. 
B) TANF. 
C) Medicaid. 
D) Social Security.

Question 16

Suppose a poverty program has a basic benefit of $10,000,and a family can earn up to $20,000 before losing all welfare benefits.The marginal tax rate is ________ percent.

Accepted Answer

A) 2.0 
B) 0.5 
C) 0.2 
D) 0.10 
A) 2.0 
B) 0.5 
C) 0.2 
D) 0.10

Question 17

Suppose that taxes on labor are increased by 10 percent and workers respond by working 2 percent fewer hours.It can be said that

Accepted Answer

A) The tax elasticity of the labor supply is 0.2. 
B) The labor supply is elastic. 
C) Employers will face lower unit costs for each worker hired. 
D) The tax elasticity of the labor supply is 5. 
A) The tax elasticity of the labor supply is 0.2. 
B) The labor supply is elastic. 
C) Employers will face lower unit costs for each worker hired. 
D) The tax elasticity of the labor supply is 5.

Question 18

Medicaid provides cash to the poor so that they may purchase medicine and doctors' services.

Accepted Answer

A) True 
 B)False

Question 19

The percentage of the working-age population that is working or seeking work is the

Accepted Answer

A) Employment rate. 
B) Social Security rate. 
C) Labor force participation rate. 
D) Worker participation rate. 
A) Employment rate. 
B) Social Security rate. 
C) Labor force participation rate. 
D) Worker participation rate.

Question 20

Income transfers that entail direct payments to recipients,such as unemployment benefits,are known as

Accepted Answer

A) In-kind transfers. 
B) Money transfers. 
C) Cash transfers. 
D) Dollar transfers. 
A) In-kind transfers. 
B) Money transfers. 
C) Cash transfers. 
D) Dollar transfers.

Exam 34: Transfer Payments: Welfare and Social Security

If the government reduced marginal tax rates on Social Security receipts to zero,

Means-tested income transfer programs are referred to as

Lower marginal tax rates for welfare programs will

When a program is means-tested,it means that

If welfare benefits equal the poverty gap for each household in poverty,then

The largest portion of Social Security expenditures is for

Thirty years ago in the United States,there were about ________ workers for every retired person.

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - Wages A welfare system based on the welfare formula given

Social Security

If welfare benefits equaled the poverty gap for each household in poverty,then

Which of the following is used to determine if a family is in poverty?

Social Security payments depend on an individual's wages,but the benefits formula is progressive.

Social Security is an example of

Refer to Figure 34.4.The implied marginal tax rate in this example is

Which of the following is an example of an in-kind transfer?

Suppose a poverty program has a basic benefit of $10,000,and a family can earn up to $20,000 before losing all welfare benefits.The marginal tax rate is ________ percent.

Suppose that taxes on labor are increased by 10 percent and workers respond by working 2 percent fewer hours.It can be said that

Medicaid provides cash to the poor so that they may purchase medicine and doctors' services.

The percentage of the working-age population that is working or seeking work is the

Income transfers that entail direct payments to recipients,such as unemployment benefits,are known as

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